Second Mortgages

A Second Mortgage is an additional home loan for a property which already has a Mortgage. These mortgages will often have rates higher than that of the First Mortgage since, should a property owner default, then when the property is foreclosed, the home loan debts are paid in the order, First mortgage first. Should there not be enough equity remaining to pay the second mortgage in full, then the second lender takes a loss. The higher mortgage rate is justified as risk mitigation.